SC reinforces the principle that while granting registration, focus should be on proposed charitable activities and not past activities:
COMMISSIONER OF INCOME TAX EXEMPTIONS VERSUS M/S INTERNATIONAL HEALTH CARE EDUCATION AND RESEARCH INSTITUTE (SLP No. 19528/2018)
Facts:
1. The assessee claims to be a charitable trust engaged in activities like education, medical aid etc. The trust has been registered under the Indian Trusts, 1882 Act.
2. However, for the purpose of claiming exemption under Sections 10 and 11 respectively of the Income Tax Act, 1961 they applied for being registered under Section 12-AA of the Income Tax Act.
3. The registration was declined by the Commissioner on the ground that there was nothing on record to indicate that the Trust was undertaking any charitable activities.
4. Being dissatisfied with the order passed by the Commissioner declining registration under Section 12-AA, the assessee went before the Appellate Tribunal, The Tribunal allowed the appeal, which was further confirmed by the Rajasthan HC. The revenue then filed an appeal with the Hon SC.
Hon SC held as below:
1. The very purpose for any assessee to seek registration under Section 12AA is to claim exemption under Sections 10 and 11 respectively of the Act, as the case may be.
2. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature.
3. To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption under Sections 10 and 11 respectively of the Act, 1961.
4. When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.
5. So the appeal by the revenue is dismissed.
